How much Tax Revenue if it was legal?

[alecr45]

I was thinking today, as I am sure most of you have, about the potential tax revenue the Gov. could make from legalizing internet poker. Does anyone have any information or spectulations on the amount of money the Gov. would make if they legalized internet poker?

[1p0kerboy]

3.3 billion in federal tax revenue and addition 1 billion in state tax revenue could be raised if the federal government were to regulate Internet poker.

from PPA's website

[Das Budrick]

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3.3 billion in federal tax revenue and addition 1 billion in state tax revenue could be raised if the federal government were to regulate Internet poker.

from PPA's website

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this is per year?

[jmxthievez]

a crapload more than 0

[1p0kerboy]

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this is per year?

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no this is total ever.

[1p0kerboy]

^^^^^sarcasm^^^^^

[Mondogarage]

Considering how little the PPA shares about it's own numbers and revenue, I think any hyperbolic assumptions have to be looked at a bit skeptically.

That said, the number is likely to be quite considerable per year, but the mechanism is tougher. How does the US tax multi-national tournaments, where the half the payees may be playing from Europe on a site based in Antigua, and aren't subject to US tax laws? So you can't just have the US take, say, a 3% rake off each payout.

You're supposed to take earnings, not expenditures, so you can't have the US, say, take a small cut of money going *into* a tourney pool. How do you tax ring games?

And how would federal government approval put money in state tax authorities' hands?

Don't mind me, just askin' questions.

[rokstedy]

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Considering how little the PPA shares about it's own numbers and revenue, I think any hyperbolic assumptions have to be looked at a bit skeptically.

That said, the number is likely to be quite considerable per year, but the mechanism is tougher. How does the US tax multi-national tournaments, where the half the payees may be playing from Europe on a site based in Antigua, and aren't subject to US tax laws? So you can't just have the US take, say, a 3% rake off each payout.

You're supposed to take earnings, not expenditures, so you can't have the US, say, take a small cut of money going *into* a tourney pool. How do you tax ring games?

And how would federal government approval put money in state tax authorities' hands?

Don't mind me, just askin' questions.

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This is an excellent point and is the precise reason they are going to such great lengths to shut everything down.

Elsewhere, I've heard people comment that why not just regulate it, let the feds have their tax cut and go back to business as usual. That the fact they hadn't done that was the logic behind why they thought it was a moral crusade after all. The fact is, that's next to impossible.

The feds need to put a lock down on the whole thing. Tabula rasa. Then put in the regs to allow for internet casinos to be based in the states so that they can tax more accurately. Whether the players being hosted are american or not, their rake is taxed.

[1p0kerboy]

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How does the US tax multi-national tournaments, where the half the payees may be playing from Europe on a site based in Antigua

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I've thought about this myself.

Sadly, this is likely to be what holds the process up of legalizing and regulating online poker. There's no guarantee that the U.S. would see the bulk of the profit.

I assume that poker rooms that operate in the U.S. would be subject to U.S. regulation and taxation.

If they set up a platform in which only U.S. players could play on, they are violating the WTO far more than they are now.

There would have to be incentive for the for companies to bring their businesses to the U.S.

[atomicsoda]

Not too complicated to tax. Tax profits of the site like any other business or total revenues like casinos are taxed in many states. Require all sites available to US residents to be licensed by an American state not a foreign entity.

[1p0kerboy]

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Require all sites available to US residents to be licensed by an American state not a foreign entity.


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How is this fair to sites regulated in Britian, etc.?

[atomicsoda]

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If they set up a platform in which only U.S. players could play on, they are violating the WTO far more than they are now.

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No way. Nothing wrong with a legal US licenced online poker site to only allow people in the US to play. Businesses do not have to offer their services to the whole world. Most business are country specific and only offer services to one country. If a US licensed poker room accepts foreign customers than the US would expect tax on their total business. If a foreign entity also tried to tax them, the poker room would face double taxation if there is not a tax treaty on point and would have to decide whether to offer services to that foreign country. Many international businesses face double taxation issues, as do individuals who work in multiple countries and have multiple residences.

[atomicsoda]

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Require all sites available to US residents to be licensed by an American state not a foreign entity.


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How is this fair to sites regulated in Britian, etc.?

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Who said anything about fair. The US gov cares about getting its tax revenue and controlling the industry not being fair.

[rokstedy]

They wouldn't exclude other countries from playing. Why do that anyway? They're not the ones being taxed. It's the rake that is taxed.

[1p0kerboy]

So Europeans could play on our platform, but we could not play on a European platform?

Will the UK not be outraged?

[rokstedy]

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So Europeans could play on our platform, but we could not play on a European platform?

Will the UK not be outraged?

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Obviously the UK being outraged does not weigh heavily on the US government.

[LeeLoo]

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So Europeans could play on our platform, but we could not play on a European platform?

Will the UK not be outraged?

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How outraged are they now? The US does not want US citizens playing on line to such an extent they are arresting Citizens of other countries and subpeoning records of foriegn companies.

If the US allowed US companies to have online casinos that are regulated by the US I think you would find most Americans would be more than happy to play on US sites only.

[rokstedy]

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So Europeans could play on our platform, but we could not play on a European platform?

Will the UK not be outraged?

[/ QUOTE ]

How outraged are they now? The US does not want US citizens playing on line to such an extent they are arresting Citizens of other countries and subpeoning records of foriegn companies.

If the US allowed US companies to have online casinos that are regulated by the US I think you would find most Americans would be more than happy to play on US sites only.

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Again, this would not be necessary. Any site run in the US would undoubtedly be open to all countries.

[LeeLoo]

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So Europeans could play on our platform, but we could not play on a European platform?

Will the UK not be outraged?

[/ QUOTE ]

How outraged are they now? The US does not want US citizens playing on line to such an extent they are arresting Citizens of other countries and subpeoning records of foriegn companies.

If the US allowed US companies to have online casinos that are regulated by the US I think you would find most Americans would be more than happy to play on US sites only.

[/ QUOTE ]


Again, this would not be necessary. Any site run in the US would undoubtedly be open to all countries.

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Perhaps I worded that wrong and should have said that Americans would be more than happy to be restricted to playing on US regulated sites.

[rokstedy]

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So Europeans could play on our platform, but we could not play on a European platform?

Will the UK not be outraged?

[/ QUOTE ]

How outraged are they now? The US does not want US citizens playing on line to such an extent they are arresting Citizens of other countries and subpeoning records of foriegn companies.

If the US allowed US companies to have online casinos that are regulated by the US I think you would find most Americans would be more than happy to play on US sites only.

[/ QUOTE ]


Again, this would not be necessary. Any site run in the US would undoubtedly be open to all countries.

[/ QUOTE ]

Perhaps I worded that wrong and should have said that Americans would be more than happy to be restricted to playing on US regulated sites.

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I wouldn't necessarily be happy. Euro's are plenty good dontators.

[LeeLoo]

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So Europeans could play on our platform, but we could not play on a European platform?

Will the UK not be outraged?

[/ QUOTE ]

How outraged are they now? The US does not want US citizens playing on line to such an extent they are arresting Citizens of other countries and subpeoning records of foriegn companies.

If the US allowed US companies to have online casinos that are regulated by the US I think you would find most Americans would be more than happy to play on US sites only.

[/ QUOTE ]


Again, this would not be necessary. Any site run in the US would undoubtedly be open to all countries.

[/ QUOTE ]

Perhaps I worded that wrong and should have said that Americans would be more than happy to be restricted to playing on US regulated sites.

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I wouldn't necessarily be happy. Euro's are plenty good dontators.

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In general most would accept it over nothing. Sure I would like to play other sites but the way it is looking who knows what is gong to happen. I would take the inch and beg for the mile later.

[ekdikeo]

Casinos in Michigan are charged either 8.5% or 18% (depending on certain circumstances) of their GROSS TOTAL INCOME. I'm sure someone could easily dig up Party's gross income last year, and multiply that out.

[oober]

I was screwing around with excel. And even if they came up with a tax% on the rake only...... At a 4% tax on an avg rake of $1.00 for 5 billion hands comes to approx. $222,000,000.00...

Now of course it would probably come down to a % of the pot. Since more hands are played at smaller stakes the higher stakes.... If the avg pot over 5 billion hands was $3.00 Tax at 1% would be $166,000,000.00, 3% $500,000,000.00

There is definitely money to be made... And this is for ring game play only......

[LeeLoo]

[ QUOTE ]
I was screwing around with excel. And even if they came up with a tax% on the rake only...... At a 4% tax on an avg rake of $1.00 for 5 billion hands comes to approx. $222,000,000.00...

Now of course it would probably come down to a % of the pot. Since more hands are played at smaller stakes the higher stakes.... If the avg pot over 5 billion hands was $3.00 Tax at 1% would be $166,000,000.00, 3% $500,000,000.00

There is definitely money to be made... And this is for ring game play only......

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Would the whole rake be taxed when a large portion is paid back to affiliates. Just wondering. I have no clue about taxes.

[oober]

Who knows, but ir was just to throw out some numbers based off of est. hands played... As you can see there is a tone of money to be made... It's not a trillion, but it surely is no drop in the bucket....

I think also the number could be much higher if the site were American owned. I think there would be more consumer confidence thus higher revenue...

[auburnman05]

Well couldn't the government set up some kind of e-wallet themselves? Like someone said above it would be impossible to tax multi-national tournaments and ring games. So why don't they set up an e-wallet that US players MUST use and just tax them as the withdraw their winnings to their bank account. That makes the most sense to me.

[rokstedy]

[ QUOTE ]
I was screwing around with excel. And even if they came up with a tax% on the rake only...... At a 4% tax on an avg rake of $1.00 for 5 billion hands comes to approx. $222,000,000.00...

Now of course it would probably come down to a % of the pot. Since more hands are played at smaller stakes the higher stakes.... If the avg pot over 5 billion hands was $3.00 Tax at 1% would be $166,000,000.00, 3% $500,000,000.00

There is definitely money to be made... And this is for ring game play only......

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I did a quick calc on this as follows:

For every 1 billion hands dealt (cash hands only), at $1 per hand in rake (most hands will be $1 or less I would figure), less 30% back to the customer in rakeback and taxed at a standard 7%, $49 million in taxes would be generated.

((1 billion * $1) * 70%) * 7% = $49 million

[rokstedy]

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it would be impossible to tax multi-national tournaments and ring games

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Not if the host is in the states.

[1p0kerboy]

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tax them as the withdraw their winnings to their bank account.

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Because they're taxing the rake that the sites are making money on, not the players.

Players are ALREADY supposed to pay taxes on winnings.

[rokstedy]

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tax them as the withdraw their winnings to their bank account.

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Because they're taxing the rake that the sites are making money on, not the players.

Players are ALREADY supposed to pay taxes on winnings.

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Additionally, if you were inferring that the government would tax the players winnings when the money is withdrawn, rather than the player claiming their winnings on their taxes, this would create a big mess. Players would then have to make the equivelant of an adjusted general journey entry in their tax returns to account for all the losses that occured (these are tax deductible of course).

But that would just be dumb...

[oober]

Like I said, just to throw out numbers, but also I don't think they would tax the rake when I think about it, but it would be as a 2nd rake.... I don't think it would be 7%, much lower because of the fact a lot of times money is just switching hands... I think this is the way they would go...

[joeker]

What are you guys talking about taxing the rake?

The poker sites would pay taxes to the US government just like any other corporation does, whether that be income, payroll or whatever.

[rokstedy]

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What are you guys talking about taxing the rake?

The poker sites would pay taxes to the US government just like any other corporation does, whether that be income, payroll or whatever.

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corporations don't "pay" payroll taxes. they withhold the taxes from the employees, then pay that amount to the feds. the rake is the basically the only form of income a site has. but you are right in the sense that it would be taxes on the rake (income) less operating expenses.

[ekdikeo]

IF everyone goes through a U.S. operated payment processor, then that will quite easily become a tool of law enforcement - example, they will search it to find people that they want to find.

The government doesn't operate services like that. That's fascism. We're not quite there yet, thankfully.

As I said, casino tax in Michigan = up to 18% of gross income. They don't give a crap what your operating expenses are. You pay a $10.5M deposit to the state to be able to run your casino, then you give them 18% of your gross income every year.